The CFO has asked you to investigate the property, equipment, and intangible asset accounts in the August
Question:
The CFO has asked you to investigate the property, equipment, and intangible asset accounts in the August 31, 2011 unadjusted trial balance and make any adjustments you feel necessary. Depreciation and amortization. Office equipment and furniture & fixtures are depreciated on a declining-balance basis at a rate of per year. Business information systems are depreciated on a declining-balance basis at a rate of 30% per year. Leasehold improvements are depreciated on a straight-line basis over the remaining term of the lease. Client relationships are amortized on a straight-line basis over five years. Woodlawn records a tull year's depreciation/amortization in the year of acquisition and no depreciation/amortization in the year of disposal Of an asset. Office equipment. During the year, new office equipment was purchased at a Cost of $6,030.98. Furniture and fixtures. During the year, new furniture and fixtures were purchased at a cost Of $22,940.76. Business information systems. No additions or disposals to business information systems occurred during the year. Leasehold improvements. Woodlawn entered into a lease for office space on September 1, 2007. The lease expires August 31, 2020. Of the amount shown as leasehold improvements, $126,971.08 relates to costs incurred in 2008, $2,251.82 relates to costs incurred in 2009, and $24,753.87 relates to costs incurred in 2010. Property. Woodlawn purchased a property for $200,000 in 2011. The building has an estimated remaining life of 40 years.
Required
Prepare a report for the CFO. Your report should include the following:
1. The journal entries you made to correct these accounts or a statement that you believe no adjustment is necessary.
2. Detailed calculations and explanations for the amounts in your journal entries or a detailed explanation of why no adjustment is necessary.
3. The financial statement captions and related amounts that will appear on the balance sheet of Woodlawn for property and equipment and intangible assets at August 31, 2011.
4. A proposed accounting policy note for property and equipment and intangible assets and proposed property and equipment and intangible assets notes for inclusion in Woodlawn's financial statements.
Accounting Information Systems The Crossroads of Accounting & IT
ISBN: 978-0132991322
2nd Edition
Authors: Donna Kay, Ali Ovlia